Aug 13 (Reuters) - U.S. stocks edged higher in afternoon trading on Thursday as retail sales rebounded in July and Cisco shares jumped after its profit beat expectations.

Cisco rallied 3.9 percent to $28.99, set for its best day since February, and gave the biggest boost to the Nasdaq and the S&P 500.

U.S. retail sales rose in July, while the trend of weekly jobless claims pointed to a tightening job market.

The S&P consumer discretionary index rose 1.2 percent, the most among the major 10 S&P sectors, though the data supported the view the Federal Reserve could raise interest rates as early as September.

Limiting gains was a decline in energy shares as U.S. crude oil prices slid to a six-and-a-half year low. The S&P energy index was down 1.3 percent.

Stocks had rebounded to end near flat on Wednesday after two days of worries over a devaluation of the yuan and a slowdown in China pressured stocks earlier in the week. Though China said its economic fundamentals provided “strong support” for the yuan, sources told Reuters that some within the government were pushing for the yuan to go even lower.

“Yesterday I think they turned it on a little bit of bargain hunting in beaten-down sectors like energy and industrials, and today it seems like they ... have shrugged off the Chinese devaluation. It’s a strong market. It looks like it’s going to take more than that to sink it,” said Uri Landesman, president at Platinum Partners in New York.

At 2:50 p.m., the Dow Jones industrial average rose 73.76 points, or 0.42 percent, to 17,476.27, the S&P 500 gained 5.95 points, or 0.29 percent, to 2,092 and the Nasdaq Composite added 20.89 points, or 0.41 percent, to 5,065.28.

The S&P financial index rose 0.6 percent, after falling in the previous two session on speculation that the Fed would wait until December to raise rates after China devalued the yuan on Tuesday. The yuan has declined since.

Economists still expect the Fed to raise rates as early as next month, according to a Reuters poll published on Thursday.

In corporate news, retailers posted mixed quarterly results.

Coty rose 5.9 percent to $30.44 after its sales beat estimates for the first time in five quarters, while Kohl’s fell 9.6 percent to $55.55 after its same-store sales missed expectations.

Declining issues outnumbered advancing ones on the NYSE by 1,548 to 1,445, for a 1.07-to-1 ratio on the downside; on the Nasdaq, 1,515 issues rose and 1,270 fell for a 1.19-to-1 ratio favoring advancers.

The benchmark S&P 500 index was posting 25 new 52-week highs and 8 new lows; the Nasdaq Composite was recording 47 new highs and 70 new lows. (Additional reporting by Tanya Agrawal in Bengaluru; Editing by Savio D‘Souza and Meredith Mazzilli)